Webcasters dodge copyright bullet

Federal regulators have handed online "Webcasters" a small victory, allowing several controversial services to stay in negotiations with the record companies despite lawsuits against them.

At issue are several online radio-like services offered by companies including MTVi, MusicMatch and others, which allow listeners some small degree of control over what type of music they hear at any given moment.

In part because these services go beyond what a traditional radio station offers, in which listeners have no control over what they hear, the record industry has said the companies are violating copyright laws. The Recording Industry Association of America (RIAA) asked the U.S. Copyright Office to bar several of these companies from ongoing arbitration over the price of music royalties online and sued several of them for copyright violations.

On Monday, the Copyright Office ruled that these companies would be included in the arbitration, even as the legal cases played out in courts. While this does not eliminate the legal dangers for the Net companies, it does let them dodge a bullet--had the Copyright Office ruled otherwise, it could have damaged their position in court.

Webcasters and record companies have been negotiating for years over the price that Net companies must pay the music labels every time they offer a stream of music online. A few companies have signed separate agreements with record companies, but most Webcasters are waiting until the Copyright Office sets a final rate. At that point they will have to start paying the labels and will also have to pay back dues for the time they have broadcast online without paying any fees.

Much of the focus for high-profile services has shifted away from the Copyright Office to the courts, however.

The terms of the MusicMatch deal were not made public, but the company said it would not change any of the features in its service that allows listeners options such as skipping songs they don't want to hear.

Analysts say these kinds of deals will influence the final negotiations over price, however.

"Suing people definitely works," said Aram Sinnreich, an analyst with Jupiter Research. "The more support (the record labels) can build for charging whatever they want, the more they'll get support in Washington, D.C."